APTV - Earnings call transcript Q3 2021

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Operator

Good day and welcome to the Aptiv Third Quarter 2021 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Vicky Apostolakos, Director of Investor Relations. Please go ahead.

Vicky Apostolakos

Thank you, Sasha. you Call. at thank XXXX Third and Conference Earnings morning for this joining Quarter Good release related Relations press be website The and aptiv.com. found presentation the at on can slide our Investor portion our tables of along with and Today's and special of will excludes operations items, continuing other review the financials of Aptiv. our restructuring address earnings GAAP in measures as the for between year XXXX release. the full and our of press outlook our presentation QX reconciliations The included both and non-GAAP are back the well financials, as on

During and impact other reflects future Form in of and certain materially -- the filings, on performance. today's performance be XX-K information forward-looking providing in maybe actual pandemic, call, site we Aptiv's SEC course will chain predicting for the which results its economy. uncertainties and we reasons global different posed supply an including And our future which from difficulty our view by COVID-XX that the current financial

President and I before today and now will strategic us Joining business detail like Joe update and over Operations. cover financial call full-year on more the Vice Q&A. and provide to results of Senior turn Massaro, in outlook Kevin a the Clark. the the are that, Business and call CEO, will President Joe opening Clark, With Kevin Aptiv to CFO would to Kevin

Kevin Clark

of the portfolio market. with demand chain production. the declined us record Beginning supply versus prior on morning. impacting across vehicle for the Slide despite this over points you, experienced a $X.X Thank Revenues joining thanks we continued and year billion negatively XX Sure. strong everyone Vicki, third X% growth constraints X, of continued in quarter

the ongoing customers of shortly. supply Operating that billion, bringing cover product on by challenging a record downstream our the Aptiv significant awards chain per the well our trust to as reflecting impacts income greater total share impacted the tightness negatively Joe have for business executing and them year-to-date of the billion, as portfolio $XXX.XX detail headwinds our given million success $XX this respectively, the $X.X relevance from and earnings environment. will in totaled in New

production chain related position investing customers into and technologies translating in while the to persist in we to that of continues our aside, enhance basis resiliency structure sequential XXXX. well proactively shareholders. quarter, both supply for the challenges headwinds Aptiv to optimizing executing anticipate the into vehicle and improve high-growth, team value cost on expect high-margin for constraints the the business further the near-term well we While a our is our our fourth Setting future, model, greater

Moving to creating Slide a positioned $XX annual to sustainable in X, the XXXX. as business, the has over past more relentless a XX% of over return total execution shareholders over an and value since XXX% more of our of return IPO of our This than represents billion date. Aptiv average strategy decade to

to joint number Hyundai, We At venture will software vehicle. leverage and our low-margin our with of our management low-growth, expanded same long-term positioning while exited segment to further value Powertrain into which capabilities benefit model. we These the outperformance robustness the unique from components, continued scale business As vehicles autonomous All year, operating vehicle, moves drive on built we portfolio the fully Aptiv, translates driving the further that Motional, our making including leverage perfectly we operating of transformation, and our lines time, the system our acquisitions and and industry-leading Lyft the an and Aptiv markets. in focus this position ride-sharing adjacent model. portfolio solutions capabilities, we completed several and software-defined driverless business we smart of increased which to established put our network data connected. in To engineered product enabled be safe, and actions actions nervous to vehicles the brain transformed presence and took proactive increasing transition off our which Last creation. green, a XXXX. Aptiv in spun around on more advanced make of

Turning X. Slide to

enhancing the We navigate continue competitive current challenging to environment successfully while of strength the proactively our position.

proven stress chain resiliency identify bottlenecks. to supply data, scenarios. and analytics management team constraints through we're leveraging technology, At Our cross-functional is daily address chain working multiple Helping time, our process. us leveraging potential same network integrated supply by the to proactively test under our crisis and

facilities costs intelligent process manufacturing of has [Indiscernible] record product program us enabled of lower we support manufacturing planning number automation increase the operating and to a Our And continue to our customer launches. quality.

service All of which levels. customer improves

business engineering are to environment. our for and dynamic model material the pursuit mitigate improvement products culture our functionality costs, and opportunities redesigning translates supply proactively to customers. to us continue increased into reduced constant semiconductor the transform costs continuous Our enabling and our improve teams lastly, operating of despite strengthen of foundation reduce our quality, And risk, to

X, Slide quarter new on $XX shown total the $X.X bookings As billion, business reached bringing to year-to-date third billion.

As record. I was a mentioned, already it

connected Aptiv of safe, choice our customers. for technology operating a our execution as portfolio flawless combined continues partner green, and with unique Our of to position

positioning customers vehicle's enhance the both capabilities systems competitive with enabling approach conceive, position. specify, that share solutions us advanced Our lowering the deliver total our overall costs, at nervous architecture the wallet around collaborative system strengthen performance and apart software time our vehicle increase and to same of us emerging to platform sets brain the in and and solutions traditional industry, us in while and OEM to

on Turning our from to highlights user segment advanced X. and safety experience Slide

better was production. vehicle which X%, declined the global than revenues XX in reduction points quarter Third

the our driver with their third our interior by Aptiv customers. and customer's advances out share on sensing further Conquest continue market And recent in chain share and to in-cabin more experience. in-cabin connectivity sensing solutions features, trend and demand demand wallet. our additional solutions. disruptions ability improving features and capabilities next-gen despite advanced through built content road our in with the continued the latest the strong collaboration opportunities delivered our evidenced playing strong to consumer industry-leading customer impacting segment. business multi-purpose sensing by gains provide The successes expected, safety enhancing software Aptiv translated This electric and market compute quarter share the This Business of into on is program safety is map us Consumers outgrowth, significant makes and as and user platform. their leveraging launches, increase our interior are to monitoring presents for evolution and partner award more leadership our of which in-cabin position sensing our a increases vehicle market supply Mercedes-Benz vehicles, New of Award features

high-voltage electrical reduction X. Solutions demand our electrified vehicles, global cable points X% industry greater the We're during automotive reflecting segment for to the strong resulting the in from Signal the systems distribution automotive engineering Turning connector Slide solutions the market in products Revenues continued our capabilities management leader XX benefit than applications. both and the for and for demand and is quarter, production manufacturing another better vehicle the a production, in and to with Solutions in and and not continued global bring acceleration Power and capabilities. ramp quarter of declined scale content quickly strong design an market awards, specific necessary for our in provides segments the areas the challenging X some environment. truck. was Signal Power overview our increases of It where development we're very of focusing the on to Slide software support example [Indiscernible] our rapidly they extension to A recent to -- great our changes customers build in accelerating business existing an adapt to rapidly macro trends. custom business as the

our previously, smart architecture, software as how are OEM mentioned customers underlying hardware, in source new they to decouple both vehicle from the we've As they beginning tactically programs. implement and

a more us all domain, end-user smart hand to provider as speed-to-market differentiation through for vehicle details. architecture and in Joe vehicle financials choice data our with and through vehicle with and be for and as analytics, data capabilities development full deep solutions interior perception which higher modular support us our accelerates hardware, flexibility customers cost-optimized high-performance, development strengthen personalization, management us These take transition features and of the that of exterior services. software testing, of through greater to to a and system to the of collaboration provide and accelerate collection lifecycle position continue customers leading fully call offer the automotive-grade extensive electrified, lower supplier as solutions. integration the vehicle software customers in literally and I'll leading position and that to to integration, that, design across the capabilities, competitive industry-leading level allows up and partners and our our enable compute, along costs the middleware our Our vehicle. allows serverization With validation partner further reuse, to well over software-defined

Joseph Massaro

Kevin primarily certain the reflecting the Starting costs $X.XX share customer quarter costs. million business from in Kevin. and with Earnings higher income $X over well reductions morning, million Revenues the levels were million, despite headwinds, And earnings FX/Commodities million, from good with challenging outgrowth the from input every Thanks, $XX schedule in continued outperform lower XX, disruption time to COVID per and longer and $XXX of and year-over-year and as X% and market as environment and of market reflecting levels. Adjusted cash were were supply operating requirements chain referenced. lead market inventory region. million growth record was down flow operating XX% million Great. resulting EBITDA and $X.X everyone. Slide the $XXX respectively, $XX suppliers,

to down product volumes high-voltage growth at all by and outgrowth in quarter. customer favorable FX In over volumes truck third quarter volumes lower launch America XX vehicle production driving mix. launch were Looking on vehicles despite were Europe, detail in for double-digit X%, line. activity movements SUV market XX, demand commodity in a strong market, points more lower in Favorable revenues XX% due our over levels. robust revenues production of Aptiv contented to growth the North we higher higher the continued a platform of across electrification perspective, driven Safety From by and offset and and representing ramp strong Slide regional regions the experience

China, reflecting leading growth. in points resulting of Lastly from XX growth s with market over revenues OEM strong and growth high-voltage local

market high-voltage in our input production. in product market to the $XX points in Including the vehicle revenues Solutions down the experience was million lower safety somewhat X% chain disruption $XXX portfolio, Moving and vehicle, next million quarter quarter, growth higher market. sale to Power higher commercial, segments semiconductors. over and supply and down user by Segment XX% in launches. outgrowth The slide. costs input well Advanced by X%, timing chain user related the EBITDA outperformance continued on strong driven over XX end-markets. experience fell program was in strong segment Signal of and FX from safety in growth the strength the as by outgrowth new additional Active primarily translating growth were disruptions supply and underlying to EBITDA of costs down revenues representing driven on and costs. industrial and and lower as driven was volumes commodities in

the in mid-October. to year the slide, Turning unchanged of margin operating next outlook and remained in the for our outlook provided from revenues the remainder our we

expect in range up $XX.X XX% to continue year. billion, of over We prior revenue the compared to the to $XX.X

to with for costs, the driven million $XXX prior in [Indiscernible] and semiconductor of estimated line the be billion our to validating sales year, to translating disruption market, We the product our XX be and of rising the is expectations, FX of full now volume market and of over lines. demonstrating the the $X.X a EBITDA this year-over-year points aligned pricing. million margins further strong chain input $X million, level operating our above technologies. growth diversity continue expect vehicle -- mainly up expected and costs be Despite over with production and Commodity roughly midpoint, our approximately Product $XXX into for of and global year, COVID billion relevance at market portfolio portfolio conversion. income flat of and $XXX strength are other by year, to be supply relevant

per of billion. $X.X of operating the share flow Lastly, and cash we $X.XX expect earnings midpoint at

investments convert Turning our driven have by expect product strong offset operating by cash inventory portfolio investment, to to cash, earnings, we continued XXXX now income in Slide us flow $X.X flow. benefits cash XX, of discussed, the to and the higher generating growth. increased as billion robust higher combined We business of enabled more model and operating in

launch record activities. can the see year-to-date the total business billion and new we you slide, supporting in cash, us through the current awards third ended to the As with middle in while enabling quarter manage of environment $X.X

Lastly, environment, in partner capital Aptiv are a our investment challenging of choice. our customers working in making helps to ready key keep running we ensure this

forward customer on for variability production XX, to lack Turning wanted schedules, visibility of the despite we the thoughts some and to outlook Slide initial provide in XXXX.

believe We the coming of the remains overall of levels Despite XXXX. continued disruptions year, unchanged vehicles will that the challenges, electrification. in continue vehicle particularly we well-positioned chain impact these with transition production contented, are and in software-enabled to lead Powertrain believe half and we increasing strategy higher to levels our supply first safety to very Active the

not ability constraints Although planning XXXX driven to With acceleration still green, outgrow and by connective production it the the until process return -pandemic XXXX. the we levels in industry said, that is are market will chain vehicle safe, megatrends. to by we early be will supply our production and in post believe XXXX, do of impacted for that pre continued confident the

As make mitigation valuations, as traction alternative our including and strategies, as continue initiatives, costs, our well commercial it on relates in supplier to engineering to source we discussions recovery material with customers. redesign, engaging input of

from the input elevated Although is costs see is unlikely year. we these some will it the in impact that initiatives, coming full the of offset benefit

costs including disruptions Additional disruptions, well production into as transportation to the freight intermittent costs, related chain elevated continue with year. next and supply the as will costs associated

not discussed, the As material supply costs these of structural are ease course XXXX. availability improve nature and have will chain we and s in as over

will line allow drive actions to the profitability to inorganically, prior technologies, taken both supporting strong us while in position invest the activities. underlying the business-pursued new Company's continue we've financial years Finally, organically our and established new and over product to

remarks. XXXX As to we've the beyond to that back I industry current closing consistently for we Kevin ensure growth With the deliver demonstrated, challenges. these investments will will that, and his continue well operating call disciplined revenue turn

Kevin Clark

XX questions. we Thanks, Joe. open I'll Slide for wrap on before up up it

the XXXX headwinds Connected product portfolio and our persist are Megatrends. to aligned 's Safe, we mentioned, expected While near-term Joe to into in confident as remain Green,

innovation strong we reflect our widening bookings delivering recent that value in to market to continued support our our operating strong creation. flawless is related our on business us track and record sustainable is execution, and and new increased and further on outgrowth, customers of to resulting a focus As momentum it's performance, clear allowing competitive us moat, better relentless of a

up let's Q&A. In delivers XX With to and of But enabled continuing shareholders the start and build with the business last what these in translate presentation, vision we and our cost-effective, line Aptiv's about I more even for solutions our deliver beyond. been a and remain a the XXXX summary, an customers the more green, on open trend future outsized our connected to providing continued journey accelerate effectively is Beginning the mobility consistently team more of next that, safe, shareholders. to As over new, that advancing we'll excited mentioned our returns laser-focused at on that for into that exciting next the with XX Company serve resilient the world years. over the decade. our customers our years, for innovative

Operator

Please today your comes Thank Instructions] make If phone, [Operator is question the you. one your equipment. [Operator reach off one function question Our from interest from follow Research. you're speaker to Instructions] to please please go first of yourself Lache mute to time, up. a limit using and Wolfe allow Rod our turned signal sure In ahead.

Rod Lache

Good morning, everybody.

Joseph Massaro

Hey, Rod.

Rod Lache

if cost COVID Company think talk the Can of effect million. $XXX million how supply you step all, more SNPS. could, for we on you of for the and costs the what year the that And a what take recovering of bit the the maybe and XX% commodity any a $XXX the hoping -- elevated? are and drove for back about to decremental overall remain that. So, prospects frame volume on did Was about the kind that we clarify more of little they first thoughts chain in importantly, if

Joseph Massaro

I Sure. with Joe. start Rod, decremental Why it's don't the

SPS to write those to that overall to implies applies think and app I QX.

things very said start I I you there's decremental and a that one-off a very challenging at lumpy couple a quarter. when just quarter two perspective. obviously Really there's of look this driving think a saw to obviously I is by, significantly will our QX. view be but of Year-over-year, We the back fall vehicle will the drivers. volume real of to a XXXX, production as half XX%. in back going is by off flat down half little over be from

with disruption the you quickly. But we much the there's do structure, it's So, Obviously, chain there's of have supply out come volume such incur cost can given time lot costs. period so a continued a down. to coming of short that only

So, down of a that you've quarter fair you've are got year. costs chain back of got hit but will half and in amount the the disruption revenue supply in coming not the only quickly, hitting

a decremental. had quarter the So, sharp

a I I much at more think we talked of historically and ranges think and year, looked back if where about. in decremental took and our step you what the full are, line we've think incremental typical with we're

So of to of volumes XX% XX%, on down. again, comes and that XX% quickly incremental to XX% decremental how depending

year, I isn't see quarter, moves line are full COVID historically generally chain given actually particularly from disruptions. you last different But it's think the we more in where think saw the with the an much -related and expect impact line the business. the when But this with a from incremental and we picking sharp year. during that. -- in We're overall I what up For in obviously supply volume,

it those really segments. run those to heavier And it on decremental. We going applies to again, applies are to --

Kevin Clark

buckets. X Kevin. your would the activities I'll break our part or I X question. offset And of is this into second Rod, to take

We're cost to as your more to with quite for supplier frankly, strategic supply I always base. strategic supply supply both which of Situations with supply benefits strategic to as becoming your as opportunities base, reduce well outside we further provide chain supplier costs. the relationships the and relates supply this, opportunity costs. fewer as supply within active chain, negotiations guess customers it one translates like relationships, reevaluating of looking supplier do, further the relationships, much reassessing, with into reduce and So, more optimize with more is, side in chain, you we're which our structure the constantly chain deeper

we're we're I underway. And XXX think to substituting today's all platform over to with customers further a discussions that equally having business provided active our lower we of inputs that in costs. in cost of support important, and will or a we've ensure but talked with respect those product supply we've standpoint. about We to doing the alternative redesign connected the lastly, the activities past from program solutions that have remain they environment

safety, to the So would areas opportunities would to areas support Then X we in continue areas with decremental things. consistent I technologies talked and to continue that in growth be to -- as cost in think say important to like even software, margins relates that important cost to past, the categorize I do and and it's those about high-voltage have would major of light it's in like opportunities, like electrification, you so growth invest structure, production in it buckets interruptions. active do

Rod Lache

on extent do put big to you on a actions? which in just finer a It's number maybe aggregate, through pretty So that, obviously. four be those to mitigated the a this could have point view

Joseph Massaro

and it. about We're for a working that is. our as talk of XXXX, there we'll part Yeah, through guidance

as as through solutions, safe have say as of that don't it's working as, on of it XX-month focused amount all timeframe, there I costs. a on lowering so to focused some innovative mitigate we in we're, developing be But are teams you it. we will overall think

Rod Lache

a Have much the than XX% half safety, -- And to been all been by sense assess just just which you this stronger been driven XX% market to second, is it was able certain high-voltage Active of able with now over parse of what you have to trajectory get it Have vehicles. the year just underlying you there's that what I really to lot first of in mix is the quarter. is of this has expected been? prioritize OEMs but think Okay. it -- was and growth obviously a this some sort out and to secular has that production component which the done extent

Kevin Clark

fair I well, -- a I think think it's question, think I tough question. I that -- -- great a it's

the it's over In I solutions, do. -- few electrification, accelerated we've other for tough years, think demand AF for and items. we've reality, seen to high-voltage last

difficult product I appears to it think as question. past to it's Joe OEM though some than richer in or the high-voltage fact overall driven has to precisely precise to chain answer extent overall producing trend a of it's mix. current electrification, little spoken that are supply precise of Like an it's But that versus the Aptiv the customers, in -- bit crisis that's the be the it's less calculus. from adoption safety

Rod Lache

you. Thank

Operator

question Our Markets. from next Joseph Capital go ahead. Please Spak comes RBC from

Joseph Massaro

Good Joe. morning,

Joseph Spak

Thank it -- it you. sometimes updated costs. the is maybe of little track sequentially, just fair give to if the Good a usually quarter supply Is I [Indiscernible] into the and what morning. but fourth year-over-year. am chain a better little Joe, just on that color -- thanks margin -- quarter and it like I is relatively the fourth COVID all is I causing bit and bit just and a quarter? flattish basis you That's that for know third on year-over-year this all that for sequentially [Indiscernible]. if again all I back seems

Joseph Massaro

we start to in million XX had disruption last of chain lap do of so Joe, supply year. costs at We QX

we was You where of are first at for -- disruption to are chain supply it specific costs. a the lap right, year picking this X quarters up

provide a more out thinking the sort that to here little little bit everything more be the little a and and inventory, that little you anything value Is of time For and as And like something higher we inventory. more going chain with of in that a cash, the you? everyone for we're carry to is lessons sort learned buffer bit sort of bit on level. going just turned incurring the mentioned, bit first structural a will That really at then

Joseph Spak

bit. on weighing I down And capital or down normally of on a I you flex of think and know CapEx, X% then, came talk about working little that sort sales.

So, some might return more deferred for like year or does a or have that? of towards expect we catch-up been just should that delayed next it

Kevin Clark

precise give I'll let a answer. more Joe

down look think OEM learned, and supplier, well committed you a lessons be greater I be learned as about and chain volumes that as there'll a as sub-suppliers customer for increased overall visibility, at the folks base of from characterize other in sure areas then not I'm -- it is -- visibility bigger is investment be where the effectively to capital will I'd to more there but the they'll through with less. will in getting more a push reality from more supply visibility smarter that as where deployed, there lessons supply so areas be better inventory, understanding trade-off there or capacity, will

but doesn't much it work difficult are So [Indiscernible] Inventory estimate I on little offsets the translates JIT certain how inventory. is think into near-term, in parts Management a how And time, certain that just without products, committed volumes, for probably at certain Joe. in parts. that a or likely to point this question more

Joseph Massaro

will we as years is that's a a a be little little as percentage good normalized about I still were lead we're around been just hand just would [Indiscernible] that years the point. but given the Volume to X more I disruptions half we're QX. half our on in inventory, movement really times. change. produce been came base, think a you there -- push think work by where would [Indiscernible], was the a say I looked Kevin's half I wouldn't is down proxy. transactional. range point, into increase X% as capex, schedules. than So, There's really if There some Joe, volume we a is, obviously year. On Production We balance overall half as I learning not of down. -- the through more a fast We transactional. under, the has good. comeback, on amount of is there I at half back had describe still think original small a we've were over sort next been inventory a an material inventory, little of to came in That There describe to of lot. fair a

We to the inventory tend be the have for resins the -- electric levels. we'll what to extent inventory them. We if to same think have distribution we higher tend you business, make connectors, we use the use about we chips

So, other XXX we outs stocks, ready for slip that you tend extended. To lead more point the to production is stock in the focused chip. sure one for that timing half in cases, you've to a some of on balance. waiting related hand on it's you're the you're once have get so making if you're inventory about -- because got product have you to have a Kevin's has that and go There XXX balance, We're on remaining parts chip, times

not But the production that now, half think there that type. was made, investment certainly, is probably the balance be going disruptions. to needs Kevin's it's of you level. forward. would -- So, there's -- was there's that full that That I see will be really of sheet, be the that To representative at some, on but point, to not the investment going

Joseph Spak

the Thanks color. for

Operator

Thank go please David you. from We're Kelley now moving ahead. on Jefferies, to

David Kelley

good Hey, my team. taking for morning, questions. Thanks

relative year, the decks and into hurdle electrification, XXXX, you those guiding we're over to to did talk another and XXXX? mix aren't and growth the Can in next quarter slide content about XQ see the sustained how into reference opportunity. we to market drivers realizing thinking Just robust about here outgrowth, you you're the but going steeper some of

Kevin Clark

product in as Yes, optimistic of connected, years 'XX you mentioned, what a the for year products this those outgrowth line but Clearly, around continue significant obviously, are areas. with our be roll of seen this as that and about, we've But trends launches demand point portfolio talked benefit past. time. in listen, to are we're green, giving that driving had as the to I not our in Joe program the there over we guidance number relates think safe, at nature it X in obviously of in should out Joe? as we've into XXXX, see we've macro

Joseph Massaro

X what of has they're benefit vehicles and continues very or into active technology, manufactured safety clearly been our out globally. from active safety it's content Even SPS seeing. ads business system broadly we've more with the other on if drivers, X.X to high-voltage that vehicles. It's The leaders. of not content consistent every

positive industrial there. really year to from expect and We're having would really And growth. businesses be over be the that content vehicle vehicle good continue and a grow lines a accretive space continue a commercial to tailwind to there's to to growth and then product market. commercial perspective So, accretive the in

David Kelley

it. Thank costs. on Got And question you. maybe the a then Okay. semi

referenced? quarter, the the driver specifically semi into and costs, noted increases and increases a horizon, the You color you on the price offsets you you're price guess further just can the some of bit of semi-impact higher on that see the thinking you potential curious I more and AS give how in input year, UX do going about next versus

Joseph Massaro

semiconductor the pricing. as be now price to a we're are still increases seeing of Obviously relates lot work two-fold. in It to Yeah. really it tends process

price increases next year. some call That seen have into think We I I'll the chips. continue what will on constrained

market. it of of a and The I'd other bit -by describe a spot as we're seeing at the thing sort moment,

paying mix they that constraints, for Again, if we're given the my XXX. about And number I institutionalized the total in increases, haven't as up primarily semiconductors. even is a the into obviously XXXX. [Indiscernible] price are you point, making just resin. rolling some we we're made and at about of semiconductor It's not to So of comments, talked -- about. much just not But that initiatives ready see are how progress this talk Kevin offset that on

Some will, of the offset take to it actions effect. when and start

David Kelley

Got it. Thank you.

Operator

on question moving Please from Delaney now to go a from We're Sachs. ahead. Mark Goldman

Mark Delaney

quarter couple bookings very the you of about And quite have particular, talk running Maybe strong. years, year-to-date. thanks for been Yes. can last in taking has very year. the Good how you this question. quarter nicely tracking fourth morning. in been Bookings see much of fourth the The

Joseph Massaro

Bookings of very sometimes the Having year-to-date; be so have awards bit customer been said running we're that, timing lumpy, a record strong difficult can it's at levels.

Kevin Clark

it's think so difficult activity that overall high of are of chain supply where Several chain on year of the north in OEM for from we level extent we're to for $XX we table the are supply seeing billion calendar to see like situations with predict. some I see given disruption. billion, what $XX today. managing engaged responsible $XX incrementally an bookings But a now billion, the fairly And in confidence, in that disruptions. predicting standpoint you're individuals

Mark Delaney

other it update, with like around and are That's we've X but chain how at with Aptiv's and ongoing, supply role semiconductors curious have with your for number may know Thank a these question how supply And not OEM procuring longer-term to disruptions, to you helpful. working industry then now. follow-up you chain related of was share working are partners been for but try about my deal this the a directly evolve? can better Tier Aptiv. just in more key you. you. the if an may components and think the discussions Thank you more while talking around I'm OEM's I and those

Kevin Clark

question. great a that's -- I

of times and be long that production Predictability is large, is and you differently. addressed can spoken I supply it of think, and the committed reevaluating the an what the look participant an several intensive, extremely to to critical industry highly role industry is semiconductor constrained. compounded times When potentially at that's all volumes, by needs important their every that leaders companies, of lead chain in currently in Having with items the is one do right? they now gets capital

of as way we committed tiers. model, players. medium-term. at the volume that more the the for semiconductor historically however, to a as the with least with tiers Or primary the Whether operating semiconductor well face working that's can to OEMs we the transition it's So, Either solve problem. operated being players,

scenario. from on strategic either standpoint. say different semiconductor relationships, relationships and I strategic relationship, likely we'll that a deeper both chain thing certainly I which the in into more the translates one a relationships side, flexible operate would volume Aptiv, as that -- for supply think for move us a be semiconductor forward more is we technology be fewer drive more will in to

Operator

Dan to moving Suisse now from our Please on Thank ahead. you. Levy with go We're Credit question. next

Dan Levy

to recognize good on -- directional to comments us X. see morning see just put you. if could 'XX. if everyone I and it. some the on I Wanted given a we Thank you've wanted appreciate Hey, comments. finer directional I maybe point slightly

prices out type could you double-digit recovery? incremental might is -- XXXX? us if are or what into be efficiencies flat performance expect then where pure an other inefficiencies, sense stay there just on stripping you they is in industry or year what growth remind what on could commodity there margins the what's where of generally You impact just today, the net early versus just volume commodity get, And a alone,

Joseph Massaro

Yeah.

-- It's Joe. Dan, me Let

Let me start.

flow not we to are to in chain as normal, driven said in by certainly to those more and were go obviously, events We it's not go prepared very where -- I material as best start view costs structural. talked on I'm chain any do give comments, be early doing think I related my supply our information think as COVID that. I and expect the the day. perspective return to this, -- about supply way, disruption the the well. away of costs, to comments really much days would XXXX said -- going my And to and those from the very we've as the as But

at year, chain historically about XX% of think I supply costs. If margins on incremental XX%. OI plus you and XXXX, proxy. we'll talked look be it's between and good carrying $XXX million a at -related the This COVID We've XX% line

closer we'd backed you that $XXX be if million, to So, XX%. out

within the COVID supply range So for related you expected the range, chain very much and and the historical when the adjust disruption costs.

add as we to on but not adjusting transitory, wouldn't so XX% treating that get those Now inflation the -- as I'm I -- we're even quarter, just we back, XX% back COVID into costs. XXX, going said focus that really we the I to for -- last not we're range with

of we and a rate, often about we've flow impacts commodity million thing rate. I've other it, has incremental $XXX there's right? obviously volume the adjusted growth rates. mentioned, us talked got on million also from negative out the that FX $XXX margin it The But So, again, incremental but copper backed about we've impacting of about

just full-year we year. about half something has to So math. come Right as of of A of think in a see about the back again, inflation you're million. material $XXX working through that the lot now, the

what the we're certainly half least start is managing the we're we're much with working rate XXXX. Again, that able what about, -- but on XXX full-year that talking back at think not speak at I of we're is to indicative to probably to for how numbers run to going we're able certainly moment. offset,

Kevin Clark

I can at just underscore to just a higher Joe but in level. the if point chime Dan, maybe makes

where were the in the It go short what fact or We the but cash step robustness historically. a of business EBITDA global if with advanced production chain underscores technologies. close and we was guidance where the these full-year we'll incremental XXXX, periods under back in 'XX relates macro effectively investment and business look model, our to model vehicle strength in cost the better be that, not this disruption, are built look $XX.X we've take and in XXXX, this you are extremely EBITDA "hey, the through quarters [Indiscernible] conversion year, And do COVID the were You strong, we and revenues of today it vehicle underlying it margins. walk for when from that time". was supply you the challenges of factor and units in at will than it is year billion, light of in at be and through a XXX all in transition to $XX.X as Joe's macro million just maybe production global you XX. headwinds And XXXX,

Dan Levy

Thank Thank certainly you. and historical perspective that's you is helpful.

a and question, the volumes like inflation. for of This the you'll there's type a single-digit or go-forward. it's [Indiscernible] weak high quite you but and margin low, investment, little get be starts could ASUX more that it's is specific revenue on have have up app little cost come number wondering that you're needs break the think segment? exposure. sharply got there wondering, I period margins. Second are related, where you software is obviously, I'm just the are But moving things really in segment know more it's but I to need margin and been this this software on are a to to should to I'm about happen to more. aid a of mid-single-digit benefit of in is else know as But happen? your where the one. And I type obviously broadly as things volume that -- what feels talking Sunday segment just guess your margins out though guess a Theoretically, what I you've continued big a it I

Kevin Clark

listen. Yeah,

existing programs connectivity and And data the is segment the of think demand user that X. active experience, and that is I X. The of ongoing three. separation X. the provides. for continued on safety, guess of software of execution -- hardware the we're I today schedules the the launch the we is predictability for for The have launching solutions that

of So, there. there's all sorts tailwind

SVA, we've areas, tremendous if about that of we makes like Now the increase some that and talked continue areas, having compute and opportunity areas high said in there's potentially in. some software of the areas sense, performance there opportunity like like areas feel to are like invest investment it then, we'll in future where

Dan Levy

you. Very helpful. Thank it. Appreciate Got it.

Kevin Clark

Dan. Thanks

Operator

our have ahead. Murphy America, Bank you. with go Please next Thank John question. From of we

John Murphy

Good morning, guys.

Kevin Clark

Hey, John.

John Murphy

would what what's I'm then whim shot curious think there's more 'XX, happening info just the and could you envision mentioned of give -- greater an the industry at of you've what the mechanically the committed in some I you in mean, at you on the degree to and could committed volume they given they're automakers all in deep supply to are how could to that I also is the the Kevin, chain. from for of finding Thanks issues a that visibility that volume that you volumes. committed whim now to solutions macro, volumes automaker going just XX at how macroeconomic in hard. out the is are chain. know slave an it's how us and that number now one happen right have supply through understand that work [Indiscernible] there hard working? sit It's because an and cycles, give automaker the

Kevin Clark

Listen, -- great John, I it's easy. not it's question a think it's and

to right, make point through way issue is OEM, has you a the the supply chain, with all the it's legitimate manufacturers. everyone but you're wafer to across the deal So, point, the -- an from

of find chain. everybody amount isn't some of it of situation you period So, time. some of end an for and ultimately, ourselves today. like up estimating the level there And of if in we aspect level supply and doing, some is products the commitment baseline in There's supply affects every in that a chain

X, Tier of supply at way products and more time. more And for that's start that, of more to some So, again standpoint, out through structural think The on X permanently this will certain for I they'll the we're on a -- -- supply the chain for In the be that's ourselves customers address think chain dig then more exchange agreed -- least we'll a commitments period I some on how to be will issues. I think visibility. suppliers. strategic of more with Tier from be X, with integrated Tier

John Murphy

a in and it we in hope you there. get ways. are actually seems spot like some down good a help in guys Sure, Okay. manage -- up good And to manage

Kevin Clark

more working and our customers under closely supply working always a our leadership, with at We're standpoint, closely. I'd mean, say Yeah. We've from we're worked suppliers. it. Joe's I chain

storm I the do we I where -induced going going think we're we learn through we're that likely how we areas incremental are areas carry XXXX. and likely in had be we're perfect There getting focused actually have operate. closely working how carry COVID we inventory, how smarter where improve just less. we have. it. it unfortunately, about there's we'll do And to more to on all than we're to ever And think but everyone's from But -- we're

John Murphy

up to mean, stuff there's well bring your ironically, they new vertical platforms. EV like integration. on And as table. architecture these their SVA, follow-up incumbents or AV from own I just you essentially that other we're about as that's a much the a But hearing are satellite manufacturers very the lot building set of EV, about that sounds talk technologies that or this

of in is So, seems to when technology semantics going some it when like like -- crap, of people and is -- oh, because but hear we hear it's there's question outsourcing your a going like they're a reverse to doesn't vertical it in-sourcing, leading integration, it of really these lot be sounds platforms.

there vertical So integration it? how is like seems what here it vertical really about think should Because really we -- semantics about clinical a generally issue is.

Kevin Clark

very there's no. of across think we to vehicle -- battery integrations And of religion. Yeah new we're kind reality, in refer your Vertical the tends like players trade-off. you'd as both a be the Listen, software number that business capabilities. a I do economic with and feel To you what of of they well-positioned that point, hardware to integration little vertical produce, an areas in got with all companies. electric point, we and them, great

We have architecture capabilities.

a couple relationships tell be trend companies the working we I from new like with and that's, we're the on place is players, but OEM's that they outsourced activity fewer legacy And all is and area, electric have likely based OEM's in from areas really to would actually from they'll trend able hardware our make it. is that car certain we software our suppliers think the dealing in in growing with, front those are and both the we're we're a in benefit OEM's, -- are actually takes or the the that more with sure the say, of that think I suppliers. you what in of content actually standpoint, view, area newer, our to discussion and that's to where hard of that standpoint the And dealing vehicle doing whether reality with going that fewer reality the with today, rapidly are battery there in are software.

John Murphy

very much. you thank Great,

Operator

Thank you.

from Citi. ahead. go Ittai from question last comes today Miceli Please Our

Ittai Miceli

Great. Thanks. Good morning, everybody.

a ones, and Just question. near-term two longer-term a quick question

well Kevin. give at or question, consumer On the that AV, you respect help recently GOM? years. question of X maybe And the could for with to on as Aptiv as maybe their the GM with leverage in the what I'm is XX heard for revenue Investor relationship potential our to curious fee, We AV. relationship with just a us emotional puts plans consumer your QX perhaps -- X the implied Joe, and Day with but years near-term the launch then AV crews and in next the strategy longer-term about takes consumer to

Joseph Massaro

hard plus is We're mix. meaningful To target, the for expecting see we good strong bit me holds precise been change be really the another perspective. that to year. same the for to a a just the XX these quarters, continue production or last can't your of visibility Ittai, introduced at growth we've go a point, yes, wrestling of of suppliers. couple dynamic it's levels. extent it's growth anything that let differently to with right? market it's AV customer And a be We've over seen downward. used schedules. that suggest this a over others because shut saw going There's AV an lack and of I obviously the on really And with number on Ittai OEMs the different question about We at call quarters, different at quickly to market. respect from -- [Indiscernible] exact the overly obviously comment this by would forecast there's point Having Listen,

Hyundai well. we'll Has vehicles have venture and XXXX. know, the and as Las So, part in elsewhere in driver-less the have you and Lyft joint extremely we Motional, is doing group which vehicles on of today with driver-less tested Vegas, is being roads fully network our which Motor

Kevin Clark

LX our in couple partnership as from driving well. advance standpoint, to on know; we ADAS full can LX we ADAS future test, of that Motional doing on vehicles feel proof there's that's like into an technologies an do. validate, Aptiv, solutions. use standpoint, A Aptiv, viewed is have the -- solutions. with of So, to And always opportunity furthest AF to they're to than comments of XX% team, XX% of ADAS And this at framework. the the less lot that a you there's technology what business in them. we continue of is solution sort extremely AV to opportunity current as to pull broadly of we've a -- doing autonomous our continue remains We spectrum on today

And it If they and you than will increases be believe fastest actually that IHS, area XX% XXXX, on the to more forecast LX will that. plus. LX by we be growing believe

tell biggest we're motional then use as and to focus LX LX, plus that's resources the -- well would you have And I with LX we're the focused space. our said beyond. enhance we a area. of solutions sort using Motional Having as concurrently in working resource internal So, and that that on as

but that's we beyond likely XXXX, we're standpoint, or sure that have. Our technology And certainly make that to focused view it's commercial that's is that's -- a that then cost it's we're want to capability on. a positioned from

Ittai Miceli

That's all. That's very helpful. Thank you.

Operator

over That closing remarks. I'd you. additional now call to like you, for Mr. Clark, session. the Q&A concludes to or today's any back hand Thank

Kevin Clark

for this Great. rest a Thank Operator. you, day. the us Thank you, Take everyone of care joining have great morning. and

Joseph Massaro

Thank you.

Operator

ladies concludes Thank call. you today's Thank gentlemen. you. participation, for and That your

disconnect. now may You

Aptiv (APTV) 4 Nov 212021 Q3 Earnings call transcript